When you see a rally like today -- one that takes your breath away in its breadth of stocks that go higher -- you are tempted to use the broad data to explain the performance. Why not? It's easy; it's spoon-fed, and it never sounds wrong.
For example, this morning's jobless claims, when lumped in with the others from the last four weeks, have resulted in the lowest unemployment filings since 2000. Not since the Great Recession, but in the year 2000. That's extraordinary. It's a good reason to buy.
Or we can talk about some positive data that came out from China and Europe last night, both of which indicate that all is not lost. I like these news items -- they comply with my checklist for an investable bottom. That checklist, despite nattering nabobs of naysaying negativity on @JimCramer on Twitter (TWTR), has nailed this one nine ways to Sunday.
Or we can approach it another way and say that the issues that brought the market down yesterday -- the decline in the price of oil and the shootings in Ottawa -- did not impact the market today because oil went higher and there was no further violence in Canada. This made it clear that the fluid situation that panicked so many in the last hours of trading were behind us.
I like these reasons, too. There was a ton of short selling yesterday, with the usual hedge funds saying and doing the usual things about bringing down the market to make their numbers. These people had to scramble like mad to switch directions. They were, as we say, off sides, and they got yellow flagged for it.
The ideologues among you can blame the Fed, as if a rally needs to be blamed on anyone because all it does it make 401ks go higher, which I kind of like, even if it makes the Tea Partiers and the short-selling hedge funds angry. I have come to a conclusion that since we have OK growth with no inflation, the endless focus on the Fed is a dodge.
It is a dodge for those who want to do no homework on the individual stocks that are providing the leadership for this rally. To do that you have to set the alarm for 3:45 a.m. EDT to read the conference calls and turn off the World Series or Thursday night football to do the same. It's a lot more fun to mouth the same old, same old about the Fed. It requires no homework. It always sounds brilliant -- even if it is wrong.
Or you can do what I do: Figure out what's going up, why it is and what its impact is on the market in general. Remember, I said when all of the concerns on my checklist were settled, we would return to the performances of individual companies as measured by their earnings reports and that's what is happening right now. For those of you who want to know how this period is going, let me say that revenues are running at 5% greater and sales are 11% better than last year's reporting period.
But as is often the case in the way between the bears and the bulls, what matters is the small unit combat. That is what really decides the battles. It is the individual stocks. I have 10 of them that defined today's action and are, alas, the real reason why we could run so much.
Without further ado, let me tell you the 10 names, in alphabetical order, that ignited today's rally with news that shocked people into recognizing the strength of this earnings season.
- American Airlines (AAL) is the bellwether stock in the airline group and one of my favorites ever since the merger between American and US Air, which brought tremendous consolidation, meaning obscene profits, to the group for the first time ever. American's earnings report and commentary were extraordinary, basically saying "buy me" because of fare increases, full planes, great visibility and lower fuel costs. This was an amazing quarter and it ignited the group. A week ago, this stock was knocking at death's door at $28. Today it's at $39. There's a move for you.
- Caterpillar (CAT) is every short-seller's favorite piñata for its propensity to miss quarters, blame China and mining and make everyone feel bad who owns it. Funny thing happened here, though. The stock was down huge ahead of the report and when the company reported, there was a major upside surprise. The bears were all over me to say negative things, so let me say this, "Bears: Pound sand." If Caterpillar can do this kind of number when things are bad, what number can it print when things are good? No wonder the company keeps buying back a lot of stock. It's cheap.
- Celgene (CELG) delivered a monster beat with its Revlimid sales; its flagship drug is up 19%. It was a breathtaking quarter with fabulous commentary about the success of some of its new cancer drugs. That's right on top of some encouraging news about a breakthrough Crohn's disease therapy. Celgene's the best of the group and it caused the rest of the group to roar, especially Regeneron (REGN), which has rallied $12 to an all-time high of $396.
- Diamond Offshore (DO) reported a surprisingly positive number. This group of offshore drilling companies has been in its own personal horrendous bear market. Having one of the weakest ones in the group report an upside surprise allowed the whole heavily-shorted cohort to bottom. It looks like Brazil is going to go full bore on drilling, too, which means that the glut of drill ships might be more in the eye of the bearish beholder.
- Lots of people expected 3M (MMM) to blow up because of its heavy exposure to overseas markets. The strong dollar, let alone, the weakening geographies pretty much assured a disappointment, no? Whoops, it didn't happen. Just the opposite, 3M reported a picture-perfect number and it caused all the negativists to scramble, which is how that huge stock rallied $7. Inge Thulin, the CEO of 3M gets my award as the best CEO of the reporting period so far.
- O'Reilly Automotive (ORLY) is a company I don't talk about much. This is a specialty retailer of auto parts that reported a gigantic increase in same-store sales. It has great margins and strong sales. O'Reilly is a reminder of the resilience of the American consumer. What a blow-away number.
- We have seen a lot of negative commentary and downgrades about the big industrials this quarter. Which is why when Parker-Hannifin (PH) shocked the market by announcing a buyback of 35 million shares ¿ heck, there are only 248 million shares outstanding -- and an astounding 31% increase in its dividend a week ahead of when it reports, people went gaga for the stock, causing it to rally $8. And it isn't done going higher. You thought the industrials were supposed to be hobbled by Europe, China, whatever? Parker-Hannifin says you thought wrong.
- ServiceNow (NOW) is a cloud-based services company that automates enterprise information technology. We have loved this company and brought them on after a recent quarter that was reported when cloud stocks were plummeting -- and despite a fantastic quarter, it got stung anyway. Today, it reported a similarly fantastic quarter and it soared 10%, signaling that the cloud space was ready to run. And that's just what happened to Salesforce.com (CRM), Workday (WDAY) and the rest of the group.
- I have loved Union Pacific (UNP) for so long that I have come to take its amazing earnings for granted. But today's numbers, with net income up 19% and freight volumes up 7% -- including some amazing industrial carload figures -- astonished me. U.S. commerce is on fire, people. Blame the Fed? How about blame corporate America for doing so well?
- Finally, a funny one, Tractor Supply (TSCO). This once darling of the retail midway shocked those who had given up on it with fantastic comparable store sales numbers. Why does that matter? Because Tractor Supply is a great analogue to Home Depot, Lowes, Costco and many other retailers. That's a great sign for the biz.
I could have selected a lot of others. We got a huge buy recommendation for Alibaba (BABA) at Barclays that tells me the stock is going much higher, taking Yahoo! (YHOO) with it ¿ sorry, Marissa Mayer haters. I think that the rally in the independent oil names, courtesy an amazingly positive presentation by Cimarex (XEC), a fast-growing shale player, reassured many who worried about lower oil. I could go on and on.
So here's the deal: The troops who play for the bulls crushed the bears in vicious hand-to-hand combat. That, more than anything else, caused stocks to rally.